PERSONAL LINES FINAL EXAM

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PERSONAL LINES FINAL EXAM

UPDATED ACTUAL EXAM WITH CORRECT

SOLUTIONS.

What part of the policy lists the rules, duties, and obligations of the insured and insurer?

• Declarations Page
• Insuring Agreement
• conditions
• exclusions - correct answer- C) Conditions

The directive that states the violation committed and requires

an agent to stop the illegal acitivity is called:

• show cause order
• subpoena
• tort
• cease and desist order - correct answer- D) cease and

desist order

Extended Coverage (EC) include all of the following perils,

EXCEPT:

• wind
• riot
• smoke 1 / 4

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• vandalism - correct answer- D) vandalism

A device which is used to minimize small nuisance claims, lower insurance premiums, and reduce morale hazards is

called:

• arbitration
• deductible
• valued policy
• coinsurance - correct answer- Deductible

All of the following perils are covered, in a PERSONAL

ARTICLES FLOATER (PAF), EXCEPT:

• inherent vice
• flood
• Earthquake
• theft - correct answer- A) Inherent vice

The policyholder has a liability of $300,000 and caused an accident injuring one person in the amount of $250,000 and another person in the amount of $150,000. What limit of coverage applies to the loss?

A) $150,000

B) $300,000

C) $250,000 2 / 4

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• $400,000 - correct answer- B) $300,000

Eligible vehicles are described in the Personal Auto Policy.Which of the following vehicles is NOT eligible?

• A newly acquired sedan
• an owned SUV
• A van used as a temporary substitute
• a truck used to make deliveries - correct answer- D) a truck

used to make deliveries

What is the deductible in an UNINSURED MOTORIST CLAIM?

A) $100

B) $200

C) $250

• $500 - correct answer- B) $200

In order for an insurer to meet their obligation to an insured,

"insurable interest" must exist:

• At the time the loss occurs
• At the time the application is made for the insurance
• At the time of application or at the time of loss
• at the time of application and at the time of loss - correct

answer- A) At the time the loss occurs 3 / 4

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A customer's response to a question to the best of their

knowledge or belief is called:

• warranty
• Material fact
• Misrepresentation
• Representation - correct answer- D) Representation

In Virginia, A NAMED DRIVER EXCLUSION (NDE) is:

• available on all auto policies
• Only available by endorsement
• Required to exclude drivers on the policy
• Not available on an auto policy - correct answer- D) Not

available on an auto policy

The purpose of the FAIR plan is to:

• give the federal government a major role in providing

insurance

• Make property insurance available for high risk property

owners.

• Require complete disclosure of the reasons for cancellations
• Force all insurance companies to participate in an insurance

pool. - correct answer- B) make property insurance available for high risk property owners.

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